Russia To Regulate Cryptocurrencies, Says Finance Ministry

At the same time that China is reportedly gearing up to shut down bitcoin exchanges in the country, Russia is moving to regulate the burgeoning cryptocurrency market.

According to a news report in Reuters, Russia’s Finance Minister, Anton Siluanov, said late last week that it doesn’t make sense to ban the digital currency, but that the government should regulate it. He said that by the end of 2017, Russia will enact a law to define the process for purchasing cryptocurrency, including registering those who want to buy the virtual currency. The financial minister said that the purchase of cryptocurrency should have similar requirements to purchasing securities like treasury bonds.

Siluanov didn’t provide any details about which digital currencies would be subject to the new regulations. During a forum in Moscow, the leader of the finance ministry did warn that the investment can be volatile, risky and insecure, noted Reuters. He told attendees that his ministry’s job is to “make investments into such instruments regulated … we must make an organized market out of the black market.”

Earlier this month, the Bank of Russia, the country’s central bank, released a statement highlighting the risks associated with cryptocurrencies such as bitcoin and initial coin offerings (ICOs). According to a news report in CoinDesk, the Bank of Russia was prompted to issue the statement due to the rise in interest in ICOs, as they are being covered more frequently by the media. With ICOs, digital currency coins are sold to investors. As the report pointed out, the cryptocurrency is so popular that an aide to President Vladimir Putin said he will hold his own ICO.

The statement from Russia’s central bank said there are “high risks” associated with exchanging cryptocurrencies and participating in ICOs in the Russian economy. What’s more, the new regulation will not allow any cryptocurrency trading on an official exchange in the country, nor will it approve the use of the technology behind digital currency for infrastructure uses, noted the news report.

“Given the high risks of circulation and use of cryptocurrency, the Bank of Russia considers it premature to admit cryptocurrencies, as well as any financial instruments nominated or associated with cryptocurrencies, to circulation and use at organized trades and in clearing and settlement infrastructure on the territory of the Russian Federation for servicing transactions with cryptocurrencies and derivative financial instruments on them,” the translated statement read, according to CoinDesk.